V.F. Corp. (VFC) CEO Steve Rendle is taking his apparel giant to the Streets for its next leg of growth.
The owner of The North Face, Timberland, Vans and Dickies said Monday it will acquire Supreme for $2.1 billion.
Rendle tells Yahoo Finance the acquisition reflects his bullishness on streetwear longer-term, and Supreme’s leadership role in the space.
Supreme has made a name for itself since its founding in 1994 by offering high quality exclusive product drops. They tend to sell out quickly, which often leads to things like hoodies fetching over $1,000 on resale sites. The company has 12 retail stores and relies on digital for nearly 60% of its sales.
V.F. Corp. estimates Supreme will rack up about $500 million in sales in its fiscal year ending January 2021. The brand has higher gross and operating profit margins than V.F. Corp’s overall portfolio, reflective of its focused business model and premium price-point products. The company thinks Supreme could reach $1 billion in sales over time as operations are expanded overseas (and likely, into more company-owned retail stores and high-end department stores).
V.F. dealmaking legacy persists
To long-time followers of V.F. Corp., doing big deals is the norm rather than exception. And it could be said the Supreme transaction was nicely telegraphed by Rendle throughout 2020.
Earlier this year, V.F. Corp. completed a $3 billion bond offering. That gave the company more than $5 billion in firepower (including a $2.2 billion unused credit line).
Rendle is no stranger to V.F. Corp.’s historically acquisitive nature, having joined the company in 1999 ahead of a major buying streak. In fact, buying well-known brands at a great value — and then scaling them up further globally — is a rite of passage of sorts for V.F. Corp. CEOs. Rendle’s predecessors Mackey McDonald and Eric Wiseman all had transformative acquisitions during their CEO tenures.
McDonald plunked down $396 million for skater lifestyle brand Vans in 2004 — the brand has since become a major growth driver worldwide. Wiseman purchased footwear maker Timberland for $2 billion in 2011 — performance has been spotty for the brand through the years, but it remains a household name and far better run under V.F. Corp’s ownership.
Rendle himself has proven he wants to keep the acquisition strategy alive. His first acquisition came late in 2017 with the $820 million cash purchase of Dickies. Now add Supreme to the mantle.
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